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Benefit Generosity and the Income Effect on Labor Supply: Quasi-Experimental Evidence

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  • Danzer, Alexander M.

Abstract

This paper uses an unanticipated, exogenous doubling of the legal minimum pension in Ukraine as a unique quasi-experiment to evaluate the income effect on various aspects of labor supply among the elderly. In contrast to previous studies, the unusually simple pension eligibility rule allows estimating a pure causal income effect. Applying difference-indifferences and regression discontinuity methods on two nationally representative data sets yields a retirement elasticity of 0.3. Men and women respond at different margins of labor supply but with similar overall effect. Despite retirement incentives being disproportionally large for low income earners old-age poverty declined significantly. --

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Bibliographic Info

Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Berlin 2011 with number 23.

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Date of creation: 2011
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Handle: RePEc:zbw:gdec11:23

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Keywords: pure income effect; benefit generosity; labor supply; retirement; poverty; wage effect;

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Cited by:
  1. Danzer, Alexander M. & Danzer, Natalia, 2014. "The Long-Run Consequences of Chernobyl: Evidence on Subjective Well-Being, Mental Health and Welfare," Discussion Papers in Economics 20969, University of Munich, Department of Economics.
  2. Inés Berniell & Dolores de la Mata & Matilde P. Machado, 2013. "The impact of a permanent Income shock on the situation of women in the household: the case of a pension reform in Argentina," DOCUMENTOS DE TRABAJO 011037, UNIVERSIDAD DEL ROSARIO.
  3. Hartmut Lehmann & Alexander Muravyev & Klaus Zimmermann, 2012. "The Ukrainian longitudinal monitoring survey: towards a better understanding of labor markets in transition," IZA Journal of Labor & Development, Springer, vol. 1(1), pages 1-15, December.

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